What Is a “Bona Fide” Fringe Benefit?

March 5th, 2015|By Jeff Bennett

We write and speak extensively to contractors about providing “bona fide” benefits to employees. Someone recently asked me what “bona fide” means. I guess sometimes we get ahead of ourselves and neglect to cover the basics! This blog post, therefore, will be focused on going back to the basics.

Merriam-Webster defines bona fide as:

Made in good faith without fraud or deceit;

Made with earnest intent: sincere;

Neither specious or counterfeit: genuine.

The Davis-Bacon Act, as well as most of the state prevailing wage laws, require that any benefits provided in which a contractor desires to take credit against prevailing wage obligations be bona fide.

The Davis-Bacon Act list common fringe benefits to be considered:

Health insurance

Life insurance

Disability insurance

Pension/retirement plan

Apprenticeship training

Vacation

Holidays

Sick leave

Supplemental unemployment benefits.

Despite common belief, contractors may take credit for contributions made under the above conventional plans without requesting the approval of the U.S. Secretary of Labor. Some states have variations on these rules and the benefits that can be offered.

Benefits that are not considered bona fide include:

Use of a company truck or other vehicle

Tools

Cellular phone

Travel expenses

Any statutory benefits, such as:

Workers compensation

Unemployment compensation

Social security contributions.

If you have additional questions please do not hesitate to contact us ordownload our whitepapers – “Harnessing the Power of Supplemental Unemployment Benefit Plans” and “Working the Fringe.”

DirectAdvisors, established in 2001 and located in Albany, New York provides bona fide benefit plan consulting and third party administrative services to merit shop (non-union) construction companies that are subject to the Davis-Bacon Act, Service Contract Act and state prevailing wage regulations. Our clients are located throughout the United States and range in size from 10 to 3,000 employees.